Dear Mrs. Emrick: This is to inform you that as your financial planner, I'm happy to respond to your request for clarification on the tax status of eBay profits. As you in all probability are already aware of, you can use eBay to clean out your closets or to run a small business. Your smart to inquire about eBay and it's tax consequences. Although there is no definite line that separates fun from profit. Or a hobby from a business. One thing is perfectly clear: the IRS taxs all income